Getting to know Ann Arbor tech entrepreneur Joe Malcoun
ANN ARBOR – Joe Malcoun is arguably one of Ann Arbor's busiest people.
He is the CEO of Nutshell, a leading customer relationship management (CRM) software company, an angel investor in several local tech companies, a co-founder of Cahoots, the new co-working tech hub in downtown Ann Arbor, and, most recently, a co-owner of The Blind Pig.
We met Malcoun at Nutshell's new headquarters at the partially-completed Cahoots at 206 E Huron St.
He was laid back and casual, reflecting a true tech persona, but surprising for someone who's schedule we're assuming looks like an in-demand wedding planner's during peak season.
Malcoun became an angel investor due to unusual circumstances.
(Photo: Ben Weatherston)
"Usually you become a CEO and you make money, and then the money allows you to become an angel investor," explained Malcoun. "I happened to have different circumstances where I had money (first)."
Following the tragic passing of both of her parents in just two years, Malcoun's wife Caitlin's grandfather passed away.
"Her grandfather was a very successful real estate investor as a hobby and he lived extremely modestly in Huntington Woods," said Malcoun. "But he was a savant business investor. As a result, we realized we had responsibility over a significant estate. We knew there was something but we never knew the extent of it and it was almost like winning the lottery and we were very young. That sounds like nothing but reason to celebrate, but the truth is it was very frightening and overwhelming.
"So then we were presented with the question: What career path would I choose and what career path would Caitlin choose if money were no object? I knew I wanted to do something entrepreneurial, but I didn’t know what or how. So I basically was like, 'You know what? I’m just going to start learning how to invest in companies.'"
And that's exactly what he did.
Cahoots under construction (Photo: Michael Hensel)
Malcoun opened a shop downtown called CKM Capital and, for six months, took meetings with anyone who was willing to share their knowledge of investing in businesses.
This intensive learning period helped him decide which people to work with and which people not to.
"It’s a world in which you can easily get sucked into the sparkle, the shiny things and ignore the people involved and it always turns out that the people involved are more important than the sparkly things," he explained.
Soon, Malcoun was the go-to guy when it came to seeking investments.
"I became a known person in the community because I was always 'on,'" he said. "It’s really nothing more than that. I just knew everyone. It’s not like I was this incredibly sophisticated investor, I think I came at it with an understanding of what I didn’t know and I hope I came out of it with some humility."
After investing in several companies, learning from mentors and helping mentor teams he'd invested in, he decided he needed a change. It was around this time he met his current business partners, Guy Suter, Lindsay Snider and Ian Barry.
"They had just finished their earn-out after selling their company to Barracuda Networks," he said. "The whole Barracuda operation here, it originated when Guy, Lindsay and Ian moved their 15-person company from Pennsylvania to Ann Arbor and Barracuda bought them and then they built it up to be an entire division of the company."
Malcoun says he connected with the group immediately when they were introduced. They were all young, successful and had money -- something that wasn't always a comfortable topic. "We couldn’t really talk to other people about it or indulge in it in a way that didn’t seem like being a (jerk)," said Malcoun.
Soon it became clear that partnering would be a good idea, considering Malcoun's network and Suter, Snider and Barry's experience.
After learning more about Nutshell and being fascinated with how well it had done with very little capital, Malcoun offered to help raise a round for the company. But they had a different idea. They asked Malcoun to become Nutshell's CEO.
"Frankly speaking, I wasn’t qualified," said Malcoun. "But after saying no twice, I realized if they’re going to give me this opportunity, it was incredible. I finally said yes. I can say, after four years, I am absolutely qualified to run this company -- I’ve made all the mistakes one can make!"
Playing darts during some downtime at Cahoots (Photo: Michael Hensel)
At that time, the team was working on Trove, Nutshell's sister company. After some collaborations, the concept of Cahoots was born.
After continuously hearing from investors that they should move both companies to a bigger tech destination like Silicon Valley, Chicago or New York, the group decided they were committed to growing their companies in Ann Arbor.
But they realized that in order to do that, they needed to change some elements of the city itself.
"There’s really two ingredients," said Malcoun. "It’s capital and talent. What attracts those things? So we started to learn more about what it means to be a vibrant startup community and it turns out that there are some critical must-haves: It’s things like a large research university, a vibrant downtown, strong cultural attractions, restaurants, bars, proximity to a large city. But it turns out those must-haves are not enough. That just gives you a chance.
"Ann Arbor has the things, but it’s not enough. You still have to be deliberate about making it happen. For us, one of the biggest things it came down to is: In order to attract the talent and the capital you need visibility. In order to get visibility, you need density."
He blames the lack of density in town on the real estate market. It is extremely expensive, and leases tend to be conservative: a less-than-ideal environment for startups.
Malcoun and his partners had a wild idea: Flip the market. Buy buildings outright and rent to tech companies, creating a burgeoning tech hub -- and this became Cahoots.
They purchased two buildings on Huron that were sold together. After they closed the deal, the building next door became available and the original project doubled to a total of 25,000 square feet.
Before and after: The front lobby at Cahoots (Photo: Meredith Bruckner)
(3D rendering: Cahoots)
Malcoun and Suter traveled to several leading co-working spaces across the country to get inspiration and guidance on their innovative project.
This was three to four years ago and, today, Cahoots is already up and running.
It houses Nutshell, Trove and Clinc, several other startups and individuals renting desks.
"We knew we wanted to build a place that was very high design," he said. "A place that was just an absolute pleasure to be at. We knew people wanted more than just an office but a center of gravity. And not just a place to serve the tenants; a place to serve everybody."
Cahoots will feature a cafe with healthy fare by a local restaurateur, a gym, a roof deck and a coffee shop open to the public. It will have a full bar to hold happy hours for members, and Malcoun said they are exploring if there is a way to commercially operate it.
Clinc's current offices at Cahoots (Photo: Meredith Bruckner)
We couldn't get through the interview without asking Malcoun about his recent purchase of iconic music venue The Blind Pig.
So why did he decide to do it?
"Everybody, including me, has a story of that band they saw at The Blind Pig," said Malcoun. "If we want this community to be an attractive place, we’ve got to have these outlets, these elements. And live music is so important.
"So we got a group together; a wonderful group mostly of local folks that represent lots of parts of the community. We have the Bloom family, a local construction company, we’ve got Rishi Narayan from Underground Printing, we’ve got Jon Oberheide from Duo, and we’ve got Darrin Greenawalt who’s a local musician. It’s a real cross section of the community."
Malcoun laughed and recalled that strangers had come up to him while dining at restaurants to thank him.
But we suspect he is used to that.
Learn more about Nutshell here.
Learn more about Cahoots, membership opportunities and project updates here.
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